US pre-open: Stocks seen higher again as investors snap up bargains

US futures pointed to another positive session on Wall Street on Wednesday, as investors put Brexit worries aside and continued to pick up some bargains.

At 1155 BST, Dow Jones Industrial Average and S&P 500 futures were down 0.6%, while Nasdaq futures were off 0.7%.

“US markets look set to open higher again this morning despite posting their best one day performance since early March as the current rally continues to build some short term momentum,” said Michael Hewson, chief market analyst at CMC Markets.

“With US bond markets fairly ambivalent about the timing of a US rate rise, the latest US economic data will be closely watched, particularly in respect to a rebound in personal spending which saw a massive jump in the April numbers by 1%. Whether this can be sustained into May is questionable but a decent gain could well be instructive with respect to a decent recovery in Q2 after a fairly weak Q1.”

Oil prices were in the black. West Texas Intermediate was up 1.3% at $48.45 a barrel and Brent crude was 1.2% higher at $49.16.

Despite the positive tone, market commentators pointed out that the gains were fragile.

“It is still very early in the process and significant political and market risks remain, so we may start to see some investors start to sell the rally, which could see markets pare back some of the gains,” said Rebecca O’Keeffe, head of investment at Interactive Investor.

The UK is yet to invoke Article 50 and kick off the process of withdrawing from the EU – something a number of EU leaders are keen for it to do. Prime Minister David Cameron, who was in Brussels on Tuesday meeting with his European counterparts to discuss the issue of Brexit, said he would leave the process to his successor.

The leaders of the other 27 EU members will meet again on Wednesday without Cameron.

In currency markets, the pound was trading at $1.3409 compared to $1.3341 late on Tuesday.

Societe Generale strategist Kit Juckes said the message from the EU leadership to Cameron in Brussels was “we’re sad to see you go, but don’t expect any favours”. Juckes said the long-term outlook for sterling remained grim.

In corporate news, Nike was under the cosh in pre-market trade after reporting a 2% drop in quarterly profit late on Tuesday.

Elsewhere, Monsanto was likely to be in focus after EU antitrust regulators indicated they could open a review of its deal with Bayer.

On the economic calendar, US personal income and spending and the PCE deflator are at 1330 BST while pending home sales are at 1500 BST.